Economic Liberty and Prosperity on Indian Reservations

From Dan Mitchell.

"The federal government screws up some big things (Social Security, health care, higher education, etc).

This video shows it also screws up on targeted issues.

The clear message is that the federal government has very bad policies that are hurting Native Americans.

It’s almost as if the system is designed to benefit bureaucrats rather than recipients (a very common problem with federal programs, unfortunately).

But not every problem is caused by Washington.

Here’s a chart from some new research by Thomas Stratmann of George Mason University. He created an index measuring the extent to which various reservations promote or hinder economic liberty.

As you can see, more economic liberty is correlated with higher levels of household income.

And here are some brief excerpts from his study.

This paper proposes a Reservation Economic Freedom Index for over 80 Indian reservations. …I document a positive association between reservations with a higher Reservation Economic Freedom Index and the prosperity of Indians, measured by the median Indian household income residing on reservations. Establishing an association between economic freedom and economic prosperity is a significant finding. …The REFI consists of components representing market freedoms and institutions that the academic economics and political science literature suggests hold promise to generate economic prosperity. …Also of interest for future research is an analysis of the effect of economic freedom on other socio-economic measures of well-being, such as poverty rates, income inequality, employment, financial investments on the reservation, and the likelihood of migration in or out of the reservation.

All things considered, I assume Washington’s policies do the most damage.

But it does not help when various tribes add to the burden of government.

P.S. The analysis of economic policy on Indian reservations is somewhat akin to the analysis of economic policy in nations that are part of the European Union. In both cases, there is not full control of economic policy (in the case of the E.U., nations have no control over trade policy and most of them have no control over monetary policy). But just like various Indian reservations can make things better or worse with the policies they control, various E.U. nations can make things better or worse with the policies they control (think Sweden vs Greece).

P.P.S. Washington’s policies are bad for Native Americans, but don’t hold your breath expecting the clowns in Washington to make things better."